Goldman deems AI stock’s 140% YTD surge as excessive

Goldman Sachs analysts have declared that the recent surge in Palantir’s stock price is overdone despite an increase in investor focus on companies that offer artificial intelligence (AI) products and services. While the Nasdaq is up 26% year-to-date, Palantir’s stock has surged up to 138% due to the demand for companies with an AI focus. However, Goldman Sachs believes that the rally is unjustified, given that AI is just an extension of Palantir’s existing work in the data analytics stack and not a step function change in its product strategy or adoption. The analysts believe that AI would need to drive a 15% increase in Palantir’s growth over the next three years to warrant current valuations. Despite this, they still believe that AI will be a tailwind for Palantir’s business in the future. The firm has raised its price target on Palantir to $10 per share, signaling a potential downside risk of nearly 35% from current levels.